MONT TREMBLANT – While it may look like the direct, immediate threat of over-the-top video has hit a plateau, don’t be fooled, Clearcable’s Rob McCann told Canadian Cable Systems Alliance delegates this morning.
As the first speaker of the day at the CCSA’s annual Connect conference, McCann woke the independent TV, internet and telecom distributors to news that online video’s growth shows little sign of slowing and that constant network investment is required to keep up with what the likes of Google and Apple are doing.
When companies the size of those two (approximate combined market capitalization, $570 billion) decide to expand or develop what they do, it will have an effect on all folks online, whether they are customers of Bell and Rogers or Dery Telecom and Mascon Cable.
Right now, a bit of a chill has come over the online video industry as some of the larger companies (Apple vs. Samsung, Rovi vs. Hulu, HTC vs. Apple, etc., etc.) sue each other over various patent infringements. “There’s a feeding frenzy around patent lawsuits now,” said McCann. “The technology is converging so quickly they need to protect their intellectual property.”
As well, the growth in Netflix has ebbed, Stateside at least, with its latest round of price increases and its impending loss of Starz pay-TV content, while the sale of Hulu.com has stalled as potential suitors question the company’s streaming rights, without which Hulu is nothing, he added.
Despite these issues, “this is just a period of calmness,” insisted McCann. Calling Netflix and Hulu early catalysts that have shattered old business models, he added this is just the beginning of massive online video consumption which will be further fuelled by mobile online video viewing.
“Netflix and Hulu are not going to go away, at least the concept is not going to go away,” said McCann.
He pointed to the 2011 M&A activity of Google, (while also noting the “behemoth” has $13 billion of cash in the bank, still), where it acquired digital rights management software company Widevine, electronic program guide developer SageTV and of course, Motorola and its cable and handset business and urged delegates to connect those dots.
“Motorola rounds out the Google platform,” said McCann. “But what’s going to happen to the Motorola set top boxes (which most CCSA members have deployed)?”
Whether Google forces dramatic change or leaves the traditional cable business to wither, either is a “gigantic risk” for CCSA member companies.
(Plus, with the next iteration of HITS QT looking like it will focus on MPEG-4, said McCann, the current boxes in the field don’t support that, which could mean a costly swap-out of those devices in customer homes.)
McCann also showed how the growth in video consumption marches ever onward, and that network operators have required to add and will continue require to build 50% more bandwidth every year. “Every year you need 50% more bandwidth than the year before,” he said, pointing to graphs that showed the same rates of consumption among customers of small, large and very large ISPs.
Some of that investment might pay off though with the rollout of a Wi-Fi mesh network, similar to what Shaw Communications has announced it is deploying in its Western Canadian cable footprint. The need for existing cellular operators to offload the huge amount of video traffic its customers will be downloading to their smartphones to other networks, like a stable Wi-Fi net, “is a huge opportunity,” said McCann since Canadian mobile video consumption between now and 2015 looks to increase from very little now to 40 Petabytes worth of monthly data traffic over mobile nets.
And to provide the wired backbone for those Wi-Fi nets, ISPs must invest in optical fibre networks of some sort, be they GPON, RFOG or any of the other ‘acronymed’ fibre network solutions out there.
McCann concluded by saying that while cable has historically been afraid to be just “the big dumb pipe,” perhaps it’s time to embrace that a little and build businesses around it, saying: “It turns out that moving packets are our bread and butter.”
Cartt.ca editor and publisher Greg O’Brien is in Mont Tremblant this week to cover the CCSA’s annual Connect conference and annual meeting.
